Why you should be focussing on China
China is already the key target for many Tamebay readers as demonstrated by the results our Winter Survey. According to a new report by Goldman Sachs, the Chinese ecommerce landscape is still in it’s infancy and growth in the future will be phenomenal compared to the Western world.
The report reveals that nearly half of Chinese consumers’ incomes goes to clothes and food compared to about 10% of US consumer’s income. Spending on “Fun” (9.2% of income in China compared with 17.3% in the US) has the largest potential for growth as incomes increase.
Goldman break down China’s population into 1.4 million earning the equivalent of $500,000+ per year, 146 million middle class earning $11,733, a massive 236 million earning $5,858 and an even larger rural working population earning just $2,000 per year.
As more workers see thir income rise and become middle class (currently just 11% of the population), China will have a massive effect on the global economy. Online retailers need to be aware that their incomes will still be comparitively low and ensure that their pricing and service meet this groups needs.
The smaller but afflulent top earners are targets for top quality branded products and we already see a huge desire for goods shipped from the West, largely driven by the Chinese consumers concern over fake products. They want to be assured that they’re spending their money on genuine goods.
China’s explosive growth in shipping is an indication that e-commerce is already expanding—and has potential to grow even further. In 2006 just 1 billion ecommerce packages were delivered but that grew 10 fold to 10 billion in 2014 and this will accelerate rapidly over the coming years.
If you want to learn more about the Chinese economy and other emerging markets, sign up for the Fashion Without Borders and Retail Without Borders event to be held on the 23rd March in London. You’ll need to book a ticket, but the event is free for retailers to attend.
All very fine in theory, but in practice selling to China is fraught with difficulties.
I used to do extremely well selling to China with them paying twice as much as other countries for the vintage items that I sell on eBay. HOWEVER, a culture has developed in China to demand partial refunds for items once received (i.e., holding items to ransom). In addition, at the moment, finding a cheap tracked shipping service is difficult. As a result, I have blocked China as a destination.
With no export guarantee scheme available for micro businesses from the Dept of Trade (or whatever it is these days), it is simply too difficult to trade with China at the moment.
Despite all this, there are some businesses starting out here in the UK set up by Chinese individuals to have items delivered to a UK warehouse for onward export to China. This works on several levels as the people who run this type of service crack down hard on any of their customers who try to conduct any type of fraud as it threatens to damage THEIR business (I know of a Bulgarian company using this business model and if they get wind of claims of non-delivery or other complaints, then they telephone the final customer and tell them to wind their neck in).
Invest about 10 million quid to make 1 quid and loose 5 million….
How many Businesses have failed selling to China…
Yes, they turnover money but making profit your having a laugh arent you